The bank pulled the loan offers after it feared it would breach strict Central Bank limits, under the new mortgage rules.

Central Bank mortgage rules introduced in February mean borrowers need bigger deposits and are restricted by tight rules on the amount they can borrow relative to their incomes.

However, banks are allowed to breach the rules in a limited number of cases up to the end of this year. If they exceed the exemption limits they face the prospect of being fined by the Central Bank.

KBC Bank feared it had exceeded the exemptions limit, so it moved to pull a number of mortgage offers made under those exemptions. This caused panic to numerous clients, affecting around 40 home buyers.

One couple, spoken to by this newspaper, said they had just sold an apartment and were forced to pull out of a deal to buy a house after KBC came back and said it was withdrawing the original lending offer.

"All our stuff is currently in storage and we are sleeping on a friend's sofa ... now we have no indication of when we will have a home," they said.

Mortgage broker Karl Deeter said couples were "having mortgage offers yanked from them, exposing them to losing deposits they had made on properties."

He blamed the Central Bank rules which he said were hitting home buyers hard.

However, KBC changed tack late yesterday evening. It said it would now honour all existing offers it had made.

It said it was required to comply with the new lending limits for residential mortgages.

It denied withdrawing loan offers, but admitted "changing some loan offers by agreement".

It said it had to manage its pipeline of mortgage loan offers on an ongoing basis.

"All existing mortgage loan offers in this pipeline will be honoured in full and progress to completion," it said.

It said it was working closely with customers to ensure they have access to the mortgage loan they qualified for, while complying with the Central Bank regulations by year end.

Because some people do not take up loan offers, or a sale is delayed, it is proving difficult for banks to work out how many loan offers made under the exemptions rules will be taken up.